The Intersection of Economic Security and Health: State EITCs benefit Children’s Health

We know that all children benefit when they live in families with adequate resources to meet their basic needs. But, not all families can make ends meet during these extraordinarily difficult economic times. That’s where the Earned Income Tax Credit (EITC) comes in. State EITCs (accompanying the federal EITC) not only make a difference for families’ pocket books, but also in the health of their children.

State EITCs are correlated to healthier babies and better outcomes across the course of children’s lives. A 2010 study revealed that living where there is a state EITC reduces the odds of maternal smoking by five percent. This is of particular importance for Kentucky where one in four mothers smoke during pregnancy. The same study also revealed a link between a state EITC and increased birth weights among infants. This too is significant for Kentucky because almost one in ten babies are born at a low birth weight. Infants with low birth weights often experience negative outcomes such as infant mortality, poor child health, and even reduced earnings as an adult.

Additionally, the Carsey Institute just published an issue brief showing more direct links between state EITCs and child health. The brief studies health-related outcomes for children by looking at the 14 states that adopted state EITCs between 1990 and 2006. The evidence suggests that when states enact EITCs, many children move from public to private health insurance, reducing children’s participation in public programs like Medicaid and State Children’s Health Insurance Program and increasing private health insurance coverage for children. This shift likely occurs because more parents are working while receiving state EITCs. Tax Credits for Working Families, an excellent resource for information on – you guessed it – tax credits, like the Earned Income Tax Credit and the Child and Dependent Care Tax Credit, wrote about the issue brief and pointed out that the movement of children from public to private insurance saves states money by reducing the number of children participating in public health programs. The savings helps to offset the cost of implementing a state EITC – and would have the same effect if Kentucky implemented one as well.

We know a state refundable Earned Income Tax Credit in Kentucky would increase work participation, generate business in local economies, promote saving for education, and help families close the gap between they need and what it takes to make ends meet. We now have significant evidence that a state EITC can directly improve children’s health in states. It is time Kentucky joins 25 other states and enact an EITC.